Economic Perspective – “This time it is different.”

by J. David Lewis

With all that has happened since the market peak in the fall of 2007, the recent three months are pretty mundane.  July 31, 2010 was the end of a strong month, which now seems to have ended two volatile months (May and June).  The S&P 500 Index return from July 31 to October 31 was 7.97%, which is a good quarter.  This recovery, like most, produced at least one period of volatility, along with widespread fears of a “double-dip recession.”  Depending on the person interpreting the history of “double-dips,” they never, or almost never, materialize.    

The response to “this time is different” should be; “Yes, this time it is different, except for all the ways it is the same as every other bear market and recovery.  And, ‘this time is different’ is a way they are all the same.”  The “double-dip recession fear” is another way bear markets are almost always the same.  This time, we heard that the pre-election uncertainty would cause a double-dip.  If it does, it will have to be after the election instead of before.   

There is more to money than money.®  The bulls and bears will create another bear market someday.  No one can know when.  Someone should have a list of these “adages” available to review the next time we are going through one of these, as a tool to help us stay grounded.   

For now, there just doesn’t seem there is more to say about our Economic Prospective.  The economy is improving slowly, which is what we have heard for at least 18 months.  I will follow the advice of an old cowboy saying – “When there’s nothing more to say, don’t be saying it” (Cowboy Ethics by James P. Owen and David R. Stoecklein).   

Contact J. David Lewis directly with david.lewis@resourceadv.com or share your thoughts on this topic below. He founded Resource Advisory Services in 1985.  National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986.  He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family.  

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